MixedThe Financial Times... a rant. An eloquent, highbrow, entertaining and enlightening rant, but a rant all the same. The authors’ bugbear is the standard approach to uncertainty in economics and related disciplines, which requires a comprehensive list of possible outcomes with well-defined numerical probabilities attached ... This is a necessary critique and the [authors] make it with verve, knowledge and a wealth of stories ... In that wealth of anecdote, however, the exact object of their criticism gets a little blurred. Are they aiming at the use of incorrect probabilities, such as when investors valued mortgage-backed securities on the basis that US house prices could not fall nationwide as never before? Or at thinking that a complex economy can be adequately captured by stylised mathematical models? Or at any attempt to put numbers on an uncertain future? ... Their alternative to probability models seems to be, roughly, experienced judgment informed by credible and consistent \'narratives\' in a collaborative process. They say little about how those exercising such judgment would be held to account. The argument would be more convincing if it also explained, say, how this approach enabled the Bank of England to leave the UK well-prepared for the financial crisis, or why it wasn’t employed.
Ben S. Bernanke, Timothy F. Geithner, Henry M. Paulson Jr.
MixedThe Financial TimesThe tragedy of this slim, self-satisfied little memoir about the 2007–2008 financial crisis is not what it gets wrong. Indeed, four of its central arguments are important and exactly right ... The problem with Firefighting, a justly pessimistic, three-headed lament...is what it fails to say, refuses to acknowledge, and is too timid (or blissfully unaware) to look in the eye ... This is a book whose authors take turns politely praising each other in the third person, but it has nothing to say about the gilded revolving door between Washington and Wall Street, or the role of the inbred legal corruption that riddled the financial sector...nor are Bernanke, Geithner, and Paulson much inclined to take a hard look at their own missteps along the way ... Despite a hand-waving acknowledgment that the financial crisis \'inflicted tremendous pain,\' the central takeaway of Firefighting is, basically, \'We saved the world. You’re welcome.\' Which is true and should be appreciated — as far as it goes ... yes, the public is wrong to think that the bailouts failed or that they were not essential. But Main Street was force-fed the Great Recession that inevitably followed the financial crisis, while the bankers who caused it continued to dine at the Four Seasons — often in the company of once and future firefighters.
Joseph E. Stiglitz
MixedThe Financial TimesStiglitz’s indictments of the single currency, and his solutions to its supposed structural flaws, are conventional and also unconvincing. By contrast, his critique of specific policies is original and extremely helpful. If eurozone leaders took his advice on policy choices, they would disprove his bigger claims about the euro’s supposedly unsustainable structure.
